September 28, 2011

A Tale of Two Companies

Posted by Jennifer Campbell Goddard, CEOINTEGRITY MARKETING SOLUTIONS

If you own a business, chances are October 2008 is a month you will not soon forget. It didn't matter if you were a good business person or not, October 2008 hit everyone like a ton of bricks. When we are all old and gray and sitting in our rocking chairs, we'll be telling our grandchildren (or great grandchildren) about those difficult times and the days that followed.

I think the real results, however, are just now starting to surface. By "real results," I mean the test results -- who passed the test of their business mettle, and who failed? It wasn't a question of whether The Great Recession hit your business or not, but rather, how did you respond? Because it's your response to challenge that determines your success, more than any single other factor.

Let's look at two of the companies I've been following since 2008, and see how their responses determined their outcome. We will call company one Digital Technology and company two Steel Fabrication.

Digital Technology would appear to have the competitive edge over Steel Fabrication, wouldn't you agree? Steel Fabrication is stuck in a capital-intensive, labor-intensive, mature market. Digital Technology ought to have the advantage of ... well ... technology! They ought to be nimble, efficient and profitable. But -- Digital Technology is a big corporation with bureaucratic bloat and Steel Fabrication is a third-generation family business. Hmmm ... let's see what happened!

Digital Technology responded to the economic downturn of 2008 by implementing the following cost-cutting measures in 2009:

At the same time, they chose to renew leases on high-rent office space in New York City, Washington, DC and London, because these prestigious addresses were seen as assets rather than liabilities.

Here is how Steel Fabrication responded:

Resolved to keep every person employed if at all possible

Slash owner's salary to bare minimum

Reorganize debt to maintain positive cash flow

Keep the CEO in the air -- via the corporation's twin-engine self-piloted plane -- touching base with key customers, bidding new jobs and closing deals

Leverage three generations of engineering prowess to provide solutions others simply could not envision

In addition to the failing economy, Steel Fabrication suffered yet another body-blow -- the sudden illness and death of their elder owner within a span of eight weeks. The company lost decades of wisdom, experience and relationships. Facing an economic crisis, his son also had to cope with deep personal grief at the loss of his beloved father, and added responsibility of caring for his suddenly-widowed mother.

One would think the deck was stacked against Steel Fabrication. And maybe it was.

But today -- Digital Technology's sales are down. In fact, they have slipped so far that the company is considering selling out. They may have waited too long, though. You see, they cut the very things that could have made their company strong. What did they THINK would happen when they eliminated their marketing department, dropped out of trade associations, and stopped meeting with people face-to-face? I'll tell you what they thought. They thought GOOGLE would save them! They thought they could sit in their expensive offices on Park Avenue and sell their wares online. They were wrong. They destroyed their own company, and are now hoping someone else will take it off their hands before it loses any more money.

Steel Fabrication? They kept all of their employees. They sadly buried their elder owner. His son is still flying about the midwest, still closing deals and solving problems that leave others scratching their heads, still caring for his firecracker-of-a-mother! He says they are starting to come out of it -- starting to come out of two of the worst years he has ever seen in his 30-some years of business. He is glad he stuck with his older twin-engine airplane ... it gets the job done, gets him out to meet and greet and wheel and deal and still make it home for dinner (which, by the way, is one of his top priorities!). He wishes he had something bigger, faster, newer ... but overall, he says, it's a good life.

And a job well done, I might add.

Steel Fabrication's story could have had a much different ending. There were plenty of reasons for this company to fail, for the owners and employees to all become victims. And who would blame them?

If you are an estate planning attorney in your own practice, you are a business owner. You can choose to adopt a victim mentality -- say the economy is bad, Congress has so confused the issue of estate taxes that no one is planning any more, that marketing is a burdensome expense. And who would blame you? You have every perfect excuse to fail.

Or you can rise to the challenges you face. Be smart. Be efficient. Invest wisely. Make personal sacrifices if necessary. Leverage technology, leverage your knowledge and experience. And above all, keep marketing. Keep building relationships, keep meeting people face-to-face. You will find that, overall, it's a good life!